2. Name
The company name is often the most powerful symbol of the generations of business owners. We are often asked whether the name can be protected going forwards and the answer is yes, with a little planning. Sellers can retain ownership of their name and licence it to the company under legal terms that protect its use and display, with the sanction of being able to remove it from the business in the event of a breach of these legal terms. This is unusual but the protection is one to be aware of.
3. The ongoing relationship
An interesting and innovative way that we have seen purchasers maintain and even grow a relationship with a selling family is to build and develop commercial relations with the existing new business arm of the company. Where staff members, or the next family generation, have developed new products or systems that the target company needs in the future, then a mutually beneficial arrangement may be found that allows the business to fund and develop this group, and even to acquire the new technology (depending on its stage). This is an interesting way to deliver continuing family input into the larger business.
Testing the temperature
Whilst a 100% sale of the business allows for a new, often larger and better funded, owner to develop the business, it means that the seller’s control is lost and they have little or no say in the business. For this reason (and for purely economic reasons), consideration to a partial sale or indeed taking on a minority investment is becoming interesting for families. Money is banked and may be distributed to family members on one side or the other, whilst the new shareholder has the opportunity to see how the business is run. This transaction may come with a legal option for either party to buy or sell the remaining shares, perhaps at a fixed price at a future date.
This opportunity to work together temporarily can be practical and very constructive in developing longer term relationships that allow the underlying business an easier and smoother transition to a new owner over time.
Family investments and creating a new legacy
A clear strategy for what to do when the sale proceeds should be an important factor in the decision to sell. Family wealth post-sale can be put to use in different ways – it can be invested in different asset classes or allow the family to pursue a range of entrepreneurial ventures. It gives the ability to diversify wealth outside a single-family business and involve a wider range of family members in different ventures. This new wealth can give the opportunity to renew the family business and create a new legacy in a different sector.
